Financial Wellness

When the door of happiness closes, another opens, but often times we look so long at the closed door that we don’t see the one which has been opened for us.

Financial Wellness 金錢人生

Because most of us take wealth as a relative term, there never seem to be enough money to do the things we want to do or buy the things we want to own. Even millionaires wants to get more money. In fact, the more money one has, the more money seems to be needed. So you find the millionaires usually works harder and wants to make their millions work harder for them. So we cannot measure Financial Wellness by how much money one has – it is all relative. Singaporeans used to use the 5Cs to measure success. (5Cs being cash, credit cards, car, club and condo). But many 5Cs owners will tell you they are not rich and they are slogging in their career to try to get to 5Bs. Where does this put the seniors or retirees in terms of Financial Wellness ?

Retirees do not have an active income which they used to receive as work wages. Most will have to depend on their nest-eggs which they saved to provide for their retirements. However, the biggest concern for us is will the nest-egg last through the entire retirement period. Now there is one known limitation in that the nest-eggs are being depleted and not built-up plus one unknown in how long will one live. Add to the otherwise happy problem of longevity, we worry about the effect of inflation on our nest-eggs. To add to the concern, even if we can plan for the routine or expected expenditures but how to cater to unforeseen illness which translates to escalating health costs ?

If you are facing the same dilemma described above, there are both a defensive and an offensive strategy to combat the need to ‘stretch your dollar’. The defensive approach calls for spending less than anticipated while the offensive approach involves adding to your nest-eggs.

Build an income stream
There are two (2) forms of income, viz active and passive. You can build either but preferably both even in retirement. Let’s examine the two approaches :

  • Active Income.
    The major advantage of having an active income would be there is topping up to the nest-egg or slower depletion of the same. But the proviso in generating an active income is health. There is a saying “When young, man use his health to buy wealth. When old, man use his wealth to buy health.” There are many things one can do to generate an active income. You will find many ways in our REVERSE Co-operative website. Very broadly, you can become start a small business or work part-time or trade your leisure/hobbies for a return.

  • Passive Income.
    This should be the mainstay of an income stream for seniors and retirees, whether you decide to work or not. However, the injustice of the financial world has robbed most of the returns that protects against inflation. With bank interest rates at almost negative or well below inflation rates, this approach have lost effectiveness to providing long-term security. In a unfair world which favours the rich and cheats the poor, REVERSE Co-op will use aggregate community strength to garner higher interest rate from the financial institutions which is not available to retail depositors. We want to return a decent yield for our members’ nest-eggs at least to fight off erosions from inflation.
Be content
Instead of accumulating things or wealth, the beauty of being in retirement is you are truly free to do what you love rather with working for someone else or some corporation’s objectives. By not spending on some non-essential items, this will reduce outflow of your reserved pot. Often we can derive the same measure of happiness whether we spend more or less money on similar things. For example, we can eat similar food either in a posh restaurant or in a hawker stall. Or we can drive a small compact or a SUV, both will take us from point A to point B. One facet of freedom for retiree is we are freed from the necessity of putting a ‘success image’. In fact, the contentment with not having to keep up with the Jones will make us feel richer than the millionaire who doesn’t feel life have given him/her enough.
Leverage community strength
For protection against unforeseen circumstances or stretching your savings, put yourself in a better bargaining position by joining forces with your cohort to achieve the same objective. For example, insurance for seniors are known to be expensive or unavailable. At the same time, group insurance rates are usually cheaper than individuals, partly because of lower selling costs to insurance companies. REVERSE co-operative can even act as agents to eliminate a layer of commission to obtain better results for investments, savings and insurance.

Taking Action

Each person’s circumstance is unique, so it is not possible for a standard plan or strategy to fit all. The best Financial Advisors can do is to try to tailor a special recommendation for you. Even then, it depends on how wide is the Financial Advisor’s expertise, whether , it be in banking (retail, corporate or investment banking etc.); insurance (life, endowment or medical etc.) or investment (bonds, equities or commodities etc.). There is no substitute to gaining knowledge for yourself so you can tell what is a safe investment vs what is risky. REVERSE co-op will run seminars and classes to educate our members how not to lose your nest-eggs or hard-earn savings. But you need to attend the classes and participate/share on seniors’ experience on how to protect yourself. Retirees have a entirely different monetary risk profile so don’t spend money to learn ‘how to get rich quick’ or ‘double your money in 7 days’. Such outside seminars are for the young and aggressive investors who have the capacity to loss some to gain some. Speak with contemporaries who are experienced and skilled in the financial area and pool resources to get a fair deal from the financial institutions.

Footnote : One of the fundamental pillars of REVERSE Co-op to enable those seniors who desire to earn some active income to do so. REVERSE itself will do business to generate profits. And the profits will be another form of income for members when they are returned to members as dividends.